UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-QSB   XQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended 30 Sept, 2007  ___ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____  ALCO, INC. (Name of small business issuer in its charter)  Nevada0-5110511-3644700(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)Suite 501, Bank of America Tower
12 Harcourt Road, Central
Hong Kong(Address of Principal Executive Office)Registrants telephone number, including area code:  852-2521-0373  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes XNo...  Applicable only to issuers involved in bankruptcy proceedings during the past five years.  Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.  Yes...  No.....  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes No X  Applicable only to corporate issuers  State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date. At Sept 30, 2007, the following shares were outstanding: 10,000,000.  Transitional Small Business Disclosure Format (Check one):  Yes...     No X   - 1 -    PART 1 - FINANCIAL INFORMATION   ITEM 1.  FINANCIAL STATEMENTS AND EXHIBITS  (a) The consolidated financial statements of ALCO, Inc. and subsidiaries (collectively, the "Company"), included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission.  Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company as included in the Company's Form 10-KSB for the year ended December 31, 2006.                  - 2 -          ALCO, INC. AND SUBSIDIARIES    CONSOLIDATED FINANCIAL STATEMENTS    Sept 30, 2007                  - 3 -        CONTENTS      PAGEConsolidated Balance Sheet (unaudited)5Consolidated Statements of Operations (unaudited)6Consolidated Statements of Cash Flows (unaudited)7Notes to Unaudited Financial Statements8            - 4 -      ALCO, INCCONSOLIDATED BALANCE SHEET
(UNAUDITED)Sept 30,2007ASSETSCurrent Assets:Cash and cash equivalents (Note 3)$4,224,202Commissions receivable, net (Note 5)613,140Total current assets4,837,342Property, plant and equipment, net (Note 6)66,234Other assetsDeposit and prepayments69,994Restricted Cash (Note 4)1,123,598Other receivable79,102Total other assets1,272,694Total Assets$6,176,270LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:Trade accounts payable$734,875Claim payable375,058Other payable143,172Accrued expenses53,500Due to directors (Note 8)15,496Due to Minority shareholders (Note 7)(192)Income tax payable359,350Current portion of obligation from Hire Purchase lease (Note 9)2,020Total Current Liabilities1,633,279Long term portion of obligation from hire purchases lease (Note 9)6,171Minority interest49,784Commitments and contingencies (Note 14)-Stockholders' Equity:Preferred stock, par value $0.01, 5,000,000 shares authorized;no shares issued and outstanding-Common stock, par value $0.001, 50,000,000 shares authorized;10,000,000 shares issued and outstanding as of Sept 30, 200710,000Additional Paid-in capital10,513Retained earnings4,416,523Stockholders' Equity4,437,036Total Liabilities and Stockholders' Equity$6,176,270See Notes to Financial Statements  - 5 -      ALCO, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)Three Months EndedNine Months EndedSept 30,Sept 30,2007200620072006RevenuesCommission income$1,187,027$1,049,096$3,321,766$2,655,437Consulting income14,166(33,670)159,9714,561Website advertising-3,50010,91722,583Enrolment fee Income1,6884342,153953Total revenues1,202,8811,019,3603,494,8072,683,534Operating ExpensesSalaries305,301199,696874,624599,754Travel expenses96,38352,900226,074161,962Rents116,615109,257341,643288,026Bad debt expenses----Depreciation4,9924,36813,28212,249Exchange loss (gain)(764)1,985(408)7,090Other general and administrative129,925124,374345,888270,434Total Operating Expenses652,452492,5801,801,1031,339,515Income (Loss) from Operations550,429526,7801,693,7041,344,019Other Income (Expense)Other income10,86013,80732,96825,021Interest income36,09621,22787,19053,851Interest expense(220)(1,481)(2,726)(4,012)Total operating expenses46,73633,553117,43274,860Income (Loss) before provisionfor Income Taxes and Minority Interest597,165560,3331,811,1361,418,879Provision for Income Taxes116,595100,992327,505254,036Income (loss) before Minority Interest480,570459,3411,483,6311,164,843Minority Interest20,2177,54537,07227,294Net Income (Loss)$460,353$451,796$1,446,559$1,137,549Basic and fully diluted earnings per share$0.05$0.05$0.14$0.11Weighted average shares outstanding10,000,00010,000,00010,000,00010,000,000  See notes to financial statements.  - 6 -      ALCO, INCCONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)Nine Months EndedSept 30,20072006Operating ActivitiesNet income$1,446,559$1,137,549Adjustments to reconcile net income tonet cash provided by operating activities:Depreciation13,28212,249Minority interest (income)37,07227,294Changes in operating assets and liabilities:(Increase)/Decrease in commission receivable (net)(381,537)19,956(Increase)/Decrease in restricted cash480,34658,048(Increase)/Decrease in enrollment fee receivable-(Increase)/Decrease in deposit and prepayment(13,865)13,439(Increase)/Decrease in other receivable(47,009)(38,262)Increase/(Decrease) in accounts payable221,129(627,278)Increase/(Decrease) in claims payable(926,530)588,927Increase/(Decrease) in other payable142,677(31,648)Increase/(Decrease) in accrued expenses(103,088)12,904Increase/(Decrease) in deferred income(1,917)5,417Increase/(Decrease) in taxation327,505254,035Net cash (used) / provided by operating activities1,194,6241,432,630Investing ActivitiesPurchase of fixed assets(8,528)(58,583)Net cash (used) by investing activities(8,528)(58,583)Financing ActivitiesRepayment of bank overdraft(43,292)(1,713)Loan from obligations under finance leases9,954Repayment of obligations under finance leases(1,346)-Repayment of amount due to minority shareholder(30,769)(25,641)Repayment of amount due to director-(74,359)Net cash provided / (used) by financing activities(75,407)(91,759)Increase in cash1,110,6891,282,288Cash at beginning of period3,113,5131,621,146Cash at end of period$4,224,202$2,903,434Supplemental Disclosures of Cash Flow Information:Cash paid (receive) during year for:Interest$2,726$4,012Income taxes$-$-See Notes to Financial Statements    - 7 -     ALCO, INC.  NOTES TO FINANCIAL STATEMENTS (UNAUDITED)   Note 1 - ORGANIZATION AND OPERATIONS  Description of Business  ALCO, Inc., (the "Company") was incorporated under the laws of the State of Nevada on June 7, 1999 as Seahorse, Inc. and changed its name to Lotus Capital Corp. on September 20, 2004.  The Company changed its name to ALCO, Inc. on February 13, 2006.  The Company is principally engaged in the marine insurance brokerage business in the Asia Pacific region, through its wholly owned subsidiary, AL Marine Holdings (BVI), Ltd., a British Virgin Islands corporation ("AL Marine").  Under the terms of the Agreement for the Share Exchange, Lotus has agreed to acquire all of the issued and outstanding stock of AL Marine and $50,000 in a share exchange transaction, in return for the issuance of 9,766,480 shares of stock of Lotus. Upon closing under the Agreement for Share Exchange, AL Marine would become a wholly-owned subsidiary of Lotus.  AL Marine is the 100% owner of Andrew Liu and Co., Ltd., a corporation principally engaged in the business of marine insurance brokerage in Asia.  AL Marine owns 60% of Chang An Consultants Ltd., a joint venture with China Changjiang National Shipping Corporation (CSC Group) that serves as a vehicle for the provision of marine insurance brokerage and other marine business services by AL Marine. AL Marine owns 85% of EdushipAsia Ltd. In 2005 and 2004, EdushipAsia Ltd was appointed as an exclusive agent by the Institute of Chartered Shipbrokers (UK) (ICS ) to set up ICSs first distant learning centre in Shanghai, PRC.  As a result of the Agreement, the transaction was treated for accounting purposes as a capital transaction and reverse merger by the accounting acquirer (AL Marine) and as a reorganization of the accounting acquiree (Lotus). Accordingly, the financial statements include the following:  The balance sheet consists of the net assets of the acquirer at historical cost and the net assets of the acquiree at historical cost; and  The statements of operations include the operations of the acquirer for the years presented and the operations of the acquiree from the date of the merger.  ALCO, Inc. and AL Marine are hereafter referred to as the Company.  - 8 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)  Note 1 - ORGANIZATION AND OPERATIONS (continued)  Control by Principal Stockholders  The directors, executive officers, their affiliates and related parties own, beneficially and in the aggregate, the majority of the voting power of the outstanding share capital of the Company. Accordingly, directors, executive officers and their affiliates, if they voted their shares uniformly, would have the ability to control the approval of most corporate actions, including approving significant expenses, increasing the authorized capital stock and the dissolution, merger or sale of the Company's assets.  Note 2 - SIGNIFICANT ACCOUNTING POLICIES  Economic and Political Risks  The Company faces a number of risks and challenges since its assets are located in Hong Kong,   a Special Administrative Region of the People's Republic of China ("PRC"), and its revenues are derived from its operations therein.  The PRC is a developing country with an early stage market economic system, overshadowed by the state.  Its political and economic systems are very different from the more developed countries and are in a state of change.  The PRC also faces many social, economic and political challenges that may produce major shocks and instabilities and even crises, in both its domestic arena and in its relationships with other countries, including the United States.  Such shocks, instabilities and crises may in turn significantly and negatively affect the Company's performance.  Basis of Presentation  The consolidated financial statements include the accounts of the Company and all its majority-owned subsidiaries which require consolidation.  Inter-company transactions have been eliminated in consolidation.  The accompanying financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP").  This basis of accounting differs from that used in the statutory accounts of the Company, which are prepared in accordance with the "Hong Kong Accounting Standard" ("HKAS").  Certain accounting principles, which are stipulated by US GAAP, are not applicable in the HKAS.  The difference between HKAS accounts of the Company and its US GAAP financial statements is immaterial.  - 9 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)   Note 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)  The Company maintains its books and accounting records in Hong Kong dollar ("HK$"), which is determined as the functional currency.  Assets and liabilities of the Company are translated at the prevailing exchange rate at each year-end. Contributed capital accounts are translated using the historical rate of exchange when capital is injected. Income statement accounts are translated at the average rate of exchange during the year. Translation adjustments arising from the use of different exchange rates from period to period are include in the cumulative translation adjustment account in shareholders' equity. Gain and losses resulting from foreign currency transactions are included in operations.  Concentration of Credit Risk  Financial instruments which subject the Company to concentrations of credit risk consist principally of accounts receivable and cash.  Exposure to losses on receivables is dependent on each customer's financial condition.  The Company controls its exposure to credit risk through a process of credit approvals, credit limits and monitoring procedures, establishing allowances for anticipated losses.  Use of Estimates  The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.  Actual results, when ultimately realized could differ from those estimates.  Significant Estimates  Several areas require significant management estimates relating to uncertainties for which it is reasonably possible that there will be a material change in the near term. The more significant areas requiring the use of management estimates relate to the valuation of accounts receivable and payable, equipment, accrued liabilities, and the useful lives for amortization and depreciation.  Revenue Recognition  Commission revenue is recognized as of the effective date of the insurance policy or the date the customer is billed, whichever is later. At that date, the earnings process has been completed and the Company can reliably estimate the impact of policy cancellations based upon historical cancellation experience adjusted by known circumstances. The policy cancellation reserve is periodically evaluated and adjusted as necessary. Subsequent commission adjustments are recognized upon notification from the insurance companies. Commission revenues are reported net of commissions paid to sub-brokers. Fee income is recognized as services are rendered.  - 10 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)  Note 2 -SIGNIFICANT ACCOUNTING POLICIES (continued)   Cash and Cash Equivalents  The Company invests idle cash primarily in money market accounts, certificates of deposit and short-term commercial paper. Money market funds and all highly liquid debt instruments with an original maturity of three months or less are considered cash equivalents.  Commissions Receivable  Commissions receivable are recognized and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount becomes questionable.  We made allowance for doubtful accounts based on a review of all outstanding amounts on a monthly basis. We analyze the aging of receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment terms.  Significant changes in customer concentration or payment terms, deterioration of customer credit-worthiness or weakening in economics trends could have a significant impact on the collectibility of receivables and the allowance. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances will be made.  Property, Plant and Equipment  Property, plant and equipment are carried at cost.  The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.  When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the income statement in the year of disposition.  Depreciation is calculated on a straight-line basis over the estimated useful life of the assets.  The annual percentages applied are:  Motor vehicles 20% Furniture and fixtures 15% Office equipment 15% Leasehold improvements 20%   - 11 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)  Note 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)  Accounts Payable and Claims Payable  In its capacity as an insurance agent or broker, the Company collects premiums from customers and, after deducting its commissions, remits the premiums to the respective insurers; the Company also collects claims or refunds from insurers on behalf of customers. Unremitted insurance premiums and claims are held in a fiduciary capacity. The obligation to remit premiums is recorded as accounts payable and the obligation to remit claims and refunds is recorded as claims payable on the balance sheet.  Pension Costs  Mandatory contributions are made to the Hong Kong's Mandatory Provident Fund (MPF), based on a percentage of the employees' basic salaries.  The cost of these payments are charged to the profit and loss accounts as they become payable in accordance with the rule of the MPF Scheme.  The employer contributions vest fully with the employees when contributed into the MPF Scheme.  Income Taxes  Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences between assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. In accordance with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," these deferred taxes are measured by applying currently enacted tax laws.  The effective tax rate was 17.5% in 2007 and 2006. The Company did not provide any current or deferred income tax provision or benefit for any period presented to date because book income is substantially equal to taxable income, with only minor timing differences with regard to the depreciation of fixed assets. Management has determined that any deferred tax asset or liability is inconsequential, and not material to the financial statements.  Fair Value of Financial Instruments  The carrying value of financial instruments, including cash and cash equivalents, receivables, accounts payable and accrued expenses, approximates their fair value at Sept 30, 2007, due to the relatively short-term nature of these instruments.  Interim Financial Information The unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flow as at Sept 30, 2007, and 2006, have been included. Readers of these financial statements should note that the interim results for the nine months period ended Sept 30, 2007, are not necessarily indicative of the results that may be expected for the fiscal year as a whole.  - 12 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)  Note 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)  Valuation of Long-Lived assets  The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of unamortized balances through measurement of undiscounted operating cash flows on a basis consistent with US GAAP.  Related Party Transactions  The captions "Due from directors" and "Due from related companies" represent loans receivable that are unsecured, non-interest bearing and have no fixed terms of repayment, and therefore are not considered current assets. The related companies are owned by directors of the Company.  The captions "Due to director" and "Due to related company" represent loans payable that are unsecured, non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The related company is a development company owned by directors of the Company.  The Company rents office space in Hong Kong and Shanghai from a company owned by directors of the Company.  Foreign Currency and Other Comprehensive Income  The accompanying financial statements are presented in United States (US) dollars. The functional currency is the Hong Kong dollar (HK$). The financial statements are translated into US dollars from HK$ at year-end exchange rates for assets and liabilities, and weighted average exchange rates for revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.  The Hong Kong Monetary Authority (HKMA), Hong Kong's central bank, maintains a Linked Exchange Rate System since 1983. The HKMA operates Convertibility Undertakings on both the strong side and the weak side of the Linked Rate of US$1:HK$7.8.  In fact, the exchange rate for HK$ to US dollars has varied by only 100ths during the first nine months of 2007 and 2006. Thus, the consistent exchange rate used has been 7.80 HK$ per each US dollar. Since there have been no greater fluctuations in the exchange rate, there is no gain or loss from foreign currency translation and no resulting other comprehensive income or loss.  Foreign currency transactions are those that required settlement in a currency other than HK$. Gain or loss from foreign currency transactions, or exchange loss, are recognized in income in the period they occur.  - 13 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)   Note 2  SIGNIFICANT ACCOUNTING POLICIES (continued)  Earnings (Loss) Per Share  Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Since the Companys common stock currently does not trade, the dilutive effect of any warrants or convertible notes outstanding cannot be determined.  Recent Accounting Pronouncements  In July 2006, the FASB issued FASB Interpretation (FIN) No. 48,  Accounting for Uncertainty in Income Taxes, which prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). The accounting provisions of FIN No. 48 are effective for fiscal years beginning after December 15, 2006. The adoption of this Interpretation will have no impact on our financial position or results of operations.  In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No.157, Fair Value Measurements, which establishes a framework for reporting fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The adoption of this standard will have no impact on our financial statements.  In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an amendment of FASB Statement No, 115, (SFAS No. 159). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of this Statement apply only to entities that elect the fair value option. However, the amendment to FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, (SFAS No. 115), applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective for the Companys consolidated financial statements for the annual reporting period beginning after November 15, 2007. The Company is currently evaluating the impact of this new pronouncement on its consolidated financial statements.     - 14 -      ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)    Note 3- CASH  Cash consist of the following:Sept 30,2007Cash on hand$6,684Cash in Bank  Saving & Checking AccountsChina Construction Bank (Asia)2,704,868United Oversea Bank7,319Bank of China5,331Cash in Bank-Fixed DepositChina Construction Bank (Asia)1,500,000$4,224,202 Cash balances are held principally at one financial institution and are not insured.  The Company believes it mitigates its risk by investing in or through major financial institutions.  Recoverability is dependent upon the performance of the institution.  The effective period for USD 1,500,000 fixed deposit is 14 days from Sept 28, 2007 to Oct 12, 2007. The annual interest rate is 4.2%   Note 4- RESTRICTED CASH  Restricted cash are cash balances held by a bank, mainly consisting of premiums collected from customers and payable to insurers, and claims received from insurers and payable to policyholders.  When the Company receives a premium from a customer, it debits the lump sum amount into one bank account and establishes a schedule to keep track of the amount of premium payable to the insurer.  At the monthly closing, the Company reclassifies the amount of premium payable to insurers as restricted cash. Also, when the Company receives a claim on behalf of a policyholder, it debits restricted cash and credits claims payable and other payables, if necessary. The restricted cash balance was $1,123,598 as of Sept 30, 2007.     - 15 -      ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)  Note 5- COMMISSIONS RECEIVABLE  Commissions receivable consist of the following:Sept 30,2007Commissions receivable$697,815Less: allowances for doubtful accounts84,675$613,140  Note 6 - PROPERTY, PLANT AND EQUIPMENTProperty, Plant and Equipment consists of the following:Sept 30,
2007Furniture and fixtures$157,836Office equipment114,270Leasehold improvements86,452358,558Less: Accumulated depreciation292,324$66,234  Depreciation expense for the six months ended Sept 30, 2007 and 2006 was $13,282 and $12,249 respectively.  - 16 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 7 - DUE TO MINORITY SHAREHOLDERSDue to shareholders consist of the following:Sept 30,2007Chiang Wei Heng Henry$(128)Chin Tsu- Kuang(64)$(192)Note 8 - DUE TO DIRECTORSDue to directors consist of the following:Sept 30,2007Andrew Liu Fu Kang$15,496   - 17 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)  Note 9- CAPITAL LEASE  On April 27, 2006, the Company entered into a lease agreement with Hitachi Credit (HK) Ltd. The related contractual obligations are summarized as follows:  Sept 30
2007-2008Sept 30
2008-2011TotalPayment Due$2,738$6,847$9,585Less: Interest7186761,394Principle$2,020$6,171$8,191  The term of the lease is 60 months with $228 as its monthly payment. The leased property was capitalized as office equipment in 2006 by the amount of the total principal, 10,739 and the related depreciation expense is 1,208 in first nine months of 2007. The principal due within one year is the current portion of long-term debt and classified as current liability.  Note 10- RELATED PARTY TRANSACTION  The Company rents office space in Hong Kong and Shanghai from companies owned by directors of the Company.  The relevant rent expenses consist of following:  9 months ended Sept 30,20072006LocationLandlordHK Office Room 501 and 502AFortune Ocean Ltd$107,538$83,308HK Office Room 502BFortune Ocean Ltd34,61526,308Shanghai Office and quarterFortune Ocean and Andrew Liu Fu Kang46,37146,154First Pacific            Development LtdDirector (Andrew) quarter15,00015,000$203,294$170,770  - 18 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)  Note 11- INCOME TAXES  The Company's effective tax rate for the nine months period ended Sept 30, 2007 and 2006 was 17.50%.  The provisions for income taxes for each of the two nine months periods ended Sept 30, 2007 and 2006 are summarized as follows: Hong Kong only:20072006Current$327,505$254,036Deferred--$327,505$254,036  Note 12  OPERATION LEASE  Future minimum lease payments for operating leases for the 5 succeeding years consists of following:  20072008-2011TotalSuite 501 & 502A, Bank of America Tower, 12Harcourt Road, Hong Kong35,76935,769Suite 502B, Bank of America Tower, 12Harcourt Road, Hong Kong11,53811,538Flat 3,24/F., Block A, Viking Garden, 42 Hing Fat Street, Hong Kong5,0005,000Room 706, Union Building Shanghai, No.100 yan An Road(East), Shanghai, PRC8,26749,60257,869Room 33, South Part, No. 173, Shanxi, Beilu, Shanghai, PRC$15,385$-$15,385House No. 12, Carmel Hill, No.12 Carmel Road, Hong Kong29,23158,46187,692$105,190$108,461$213,253    - 19 -     ALCO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)   Note 13  COMMITMENTS AND CONTINGENCIES  The Company's business operations exist solely in the PRC and are subject to significant risks not typically associated with companies in North America and Western Europe.  These include risks associated with, among others, the political, economic and legal environments and foreign currency limitations.  The Company's results may thus be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies, laws, regulations, anti-inflationary measures, currency conversion and remittance limitation, and rates and methods of taxation, among other things.  Note 14  SUBSEQUENT EVENTS  During October 2007, the Company issued 150,000 common shares to pay $50,000 of accrued professional fees for financial advisory services.    - 20 -     ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS  Certain statements in this report, including statements in the following discussion, which are not statements of historical fact, are what are known as forward-looking statements, which are basically statements about the future.  For that reason, these statements involve risk and uncertainty since no one can accurately predict the future.  Words such as plans, intends, will, hopes, seeks, anticipates, expects, and the like, often identify such forward-looking statements, but are not the only indication that a statement is a forward-looking statement.  Such forward-looking statements include statements concerning our plans and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present and future operations will or may produce revenues, income or profits.  Numerous factors and future events could cause the Company to change such plans and objectives, or fail to successfully implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits.  Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this report on Form 10QSB and in the Companys other filings with the Securities and Exchange Commission.  No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.  PLAN OF OPERATIONS  Our plan of operations for 2007 includes both expansion and improvement of our efficiency and cost competitiveness. This includes the formation of branch offices in other cities in China.  These branches will rent office space in existing buildings. We will determine how many offices to open based upon how much working capital we have at the time when we begin to open new offices.  Management will determine in which cities we will form branch offices.  We believe that this will greatly enhance the level of service that we provide to our customers in China and further expand our market share in the marine insurance business. Both the extent to which we are able to implement this plan of operations and the timing of its implementation will depend, largely, on the availability of working capital, which we may not have or be able to raise.  Because there is no assurance that working capital will be available to us, there is also no assurance regarding the extent to which we will be able to implement our plan of operations within the foreseeable future.  We do not plan to hire additional employees in the next twelve months.  We do not have any material off-balance sheet arrangements.   RESULTS OF OPERATIONS  THREE MONTHS ENDED SEPT 30, 2007 COMPARED WITH THREE MONTHS ENDED SEPT 30, 2006.  Revenues for the three months ended Sept 30, 2007 were $1,202,881, as compared to revenues of $1,019,360 for the three month period ended Sept 30, 2006.  This increase of $183,521, or approximately 18%, was the result of greater commission income due to premium increases and consulting income.  - 21 -    Net income before tax and minority interest for the three months ended Sept 30, 2007 was $597,165 compared to $560,333 for the three-month period ended Sept 30, 2006.  The increase in pre-tax profit of $36,832, or approximately 6.6%,  was due to an increase in commission income during the three months ended Sept 30, 2007.  Operating expenses for the three months ended Sept 30, 2007 were $652,452 compared to $492,580 for the three month period ended Sept 30, 2006.  The increase of $159,872, or approximately 32%, was mainly due to increases in salary, travel expense, and rental expenses during the three months ended Sept 30, 2007  NINE MONTHS ENDED SEPT 30, 2007 COMPARED WITH NINE MONTHS ENDED SEPT 30, 2006 .   Revenues for the nine months ended Sept 30, 2007 were $3,494,807, as compared to revenues of $2,683,534 for the nine month period ended Sept 30, 2006.  This increase of $811,273, or approximately 30%, was the result of greater commission income due to premium increases and consulting income.  Net income before tax and minority interest for the nine months ended Sept 30, 2007 was $1,811,136 compared to $1,418,879 for the nine-month period ended Sept 30, 2006.  The increase in pre-tax profit of $392,257, or approximately 27.6%, was due to an increase in commission income during the nine months ended Sept 30, 2007.  Operating expenses for the nine months ended Sept 30, 2007 were $1,801,103 compared to $1,339,515 for the nine month period ended Sept 30, 2006.  The increase of $461,588, or approximately 34.5%, was mainly due to increases in salary, travel expense, rental and other general and administrative expenses during the nine months ended Sept 30, 2007.      LIQUIDITY AND CAPITAL RESOURCES  For the nine months ended Sept 30, 2007, cash provided by operating activities totaled $1,194,624. This was primarily due to net income during the period plus an increase in commission receivable, deposit and prepayment, and other receivables as well as a decrease in claims payable, accrued expenses and deferred income, partially offset by a decrease in restricted cash as well as an increase in accounts payable, other payable and income tax payable. For the nine months ended  Sept 30 2006, cash provided by operating activities totaled $1,432,630. This was mainly due to a net income plus an decrease in commission receivable, restricted cash and deposit and prepayment as well as a increase in claims payable, accrued expenses, deferred income and income tax payable, partially offset by an increase in other receivable as well as decrease in accounts payable and other payable.  For the nine-month period ended Sept 30, 2007, cash used in investing activities amounted to $8,528. The use of funds was for the purchases of office equipment. For the nine months ended  - 22 -     Sept 30, 2006, cash used in investing activities amounted to $58,583. The use of funds was for the purchases of office equipment  For the nine months ended Sept 30, 2007, cash used in financing activities amounted to $75,407, which was due to repayment of obligations under finance leases, bank overdraft fees and funds due to a minority shareholder.  For the nine months ended Sept 30, 2006, cash used in finance activities amounted to $91,759, which was due to loan from obligations under finance leases, repayment of bank overdraft, amount due to director and amount due to minority shareholder.  For the nine months ended Sept 30, 2007, the Companys balance sheet reflects current and total assets of $6,176,270, and total liabilities of $1,739,234. The Company has bank and cash equivalents of approximately $4,224,202 as of Sept 30, 2007. The Company has sufficient funds to satisfy its financial commitments and working capital requirements for the next twelve months.  During the period end, the Company had $19,311 of commitments for capital expenditures and off-balance sheet arrangements as well as lease commitments of $213,253.   ITEM 3. CONTROLS AND PROCEDURES  The Securities and Exchange Commission defines the term disclosure controls and procedures to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.  As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and principal accounting officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified.  Our chief executive office and principal accounting officer also concluded that our disclosure controls and procedures were effective as of Sept 30, 2007 to provide reasonable assurance of the achievement of these objectives.  There was no change in the Company's internal control over financial reporting during the quarter ended Sept 30, 2007, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.   - 23 -    PART II - OTHER INFORMATION  ITEM 1. LEGAL PROCEEDINGS None.   ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSUNREGISTERED SALES OF EQUITY SECURPROCEEDS None.  ITEM 3. DEFAULTS UPON SENIOR SECURITIES None.  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  ITEM 5. OTHER INFORMATION None  ITEM 6. EXHIBITS  The following exhibits are filed herewith:  3.1 Articles of Incorporation (herein incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on January 6, 2005).  3.1(b) Amendment to Articles of Incorporation (herein incorporated by reference from Registration Statementon Form 10-SB filed with the Securities and Exchange Commission on January 6, 2005).  3.2 Bylaws (herein incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on January 6, 2005).  10.1 Exclusive representative agreement between ALC and The Strike Club (herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on June 5, 2006).  10.2 Agreement between EduShipAsia Ltd. and the Institute of Chartered Shipbrokers appointing EduShipAsia Ltd. as ICSs exclusive agent in China (herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on June 5, 2006).  10.3 Employment Agreement between Andrew Liu & Company, Ltd. and Andrew Liu. (Herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on September 14, 2006)  10.4 Employment Agreement between Andrew Liu & Company, Ltd. and John Liu. (herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on September 14, 2006).   - 24 -     31.1 Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.2 Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  32.1 Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  32.2 Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.      - 25 -      SIGNATURES  In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.   ALCO, INC.   By: /s/ Andrew Liu, CEO and Chairman  Date:  Nov 14, 2007   By: /s/ Yip Kam Ming, Chief Financial Officer  Date:  Nov 14, 2007   By: /s/ John Liu, Director  Date:  Nov 14, 2007       - 26 -